New Jersey towns say water law is draining tax base, leaving schools 'beyond crisis'

In New Jersey's Highlands, officials in several communities have said a law intended to safeguard drinking water for millions has also weakened the tax base that towns and school districts depend on.

Here's what to know

At the center of the fight is the Highlands Water Protection and Planning Act, enacted in 2004, which limits development across an 88-municipality region that supplies water to about 6 million to 7 million people. 

According to NorthJersey.com, leaders from Jefferson, West Milford, Ringwood, and Vernon argued that those restrictions have produced a "one-way benefit" for the rest of the state.

Supporters of the act say it has kept important forests, reservoirs, and wildlife-rich land from being overtaken by development. The towns seeking relief, though, contend that the state never fully delivered the compensation it had promised.

To emphasize how much the rest of New Jersey relies on the area, Highlands Council executive director Ben Spinelli said, "Every day, over 860 million gallons of water are exported out of the region to other parts of the state."

Jefferson Mayor Eric Wilsusen said limits on adding homes and businesses have shrunk tax ratables while expenses keep climbing. 

"I call the Highlands Act a death by a thousand cuts, because that's what's happening to us," he noted. "We are beyond crisis mode."

More background

School districts, local leaders say, are among the hardest hit. In Jefferson, then-Superintendent Jeanne Howe said the district had lost $45 million in state aid under New Jersey's S2 school-aid formula, and it filed a deficit budget for the 2026-27 school year. To cope, the district sold buildings and closed Cozy Lake Elementary School.

West Milford has been dealing with similar budget strain. On April 28, its Board of Education voted to close Paradise Knoll Elementary School for 2026-27 after state aid fell from $15 million in 2018-19 to $5.8 million in 2025-26.

"We have to close this building because it's either a building or it's people," board member William Cytowicz said.

When a limited number of towns carry too much of the cost, communities can end up with fewer teachers, bigger class sizes, cuts to school programs, and diminished local services.

What can be done?

Lawmakers in Trenton have begun pushing for assistance. State Senator Anthony Bucco and state Senator Latham Tiver supported a bill introduced in May that would provide extra school aid to certain districts in the Highlands and the Pinelands, where comparable development limits are also in place. Assemblywoman Aura Dunn backed a matching bill in the Assembly.

Dunn's "Clean Water Promise" bill would raise watershed moratorium offset aid and watershed property municipal aid from $47 per acre to $94 per acre. Separately, Assemblywoman Marisa Sweeney announced another $250,000 for Jefferson schools and $317,000 for West Milford.

Highlands officials are also examining examples from New York. Spinelli highlighted programs there that combine land preservation with stronger financial help for municipalities and taxpayers.

"What we're experiencing right now — budget pressures, funding challenges and difficult choices — is not just a Jefferson issue," Howe said. "What happens here today will eventually happen in other Highlands districts tomorrow."

Where can I learn more?

The dispute in the Highlands is part of a bigger question: Who pays for protecting water supplies when growth is restricted?

• In New Jersey, water rates could rise 12% even as shutoffs climb and aid lags.

• In California, permanent water restrictions on cities have shown how states can reshape local growth.

Highlands towns argue that water protection and public budgets are tightly connected. Decisions about water can shape far more than reservoirs and treatment plants.

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